Unseduced by massive advertising, men aren't snapping up drugs to treat impotence as often as expected.

Viagra and Cialis tablets on a drugstore tray.

By Daniel Acker, Bloomberg News

Last year's world sales for the medications were about $2.7 billion, SunTrust Robinson Humphrey estimates — at least $1 billion lower than drug industry analysts forecast two years ago.

Pfizer's Viagra pioneered the market in 1998. At the time, one Wall Street firm reportedly expected that drug alone to post sales of $4.5 billion by now. Instead, its 2004 sales were $1.7 billion, down 11% from 2003.

Newcomers likewise have failed to spark heavy desire. Cialis and Levitra entered the U.S. market in late 2003, giving Viagra its first real competition. "They expanded the market, but not as much as they had hoped," Deutsche Bank's pharmaceutical analyst Barbara Ryan says.

Not even Medicare's coverage of the pills, expected Jan. 1, will be much of a boon, Ryan says. While more consumers may get the pills, Medicare is likely to negotiate price discounts that will offset some of those increased sales.

What's more, Medicare covers only those over 65 and some younger disabled consumers. Only 22% of Viagra prescriptions go to men 60 to 69, Pfizer says, and 9% to those 70 and older.

"There could be some benefit," Ryan says. "It won't be all that substantial."

Despite disappointments, the market is growing. U.S. sales rose 10% last year through November, says market research firm IMS Health. That growth may have had a heavy cost, however.

U.S. consumer advertising for Cialis, jointly marketed by Eli Lilly and biotech firm Icos, reached $165 million in the first 11 months of last year, says Nielsen Monitor-Plus.

That's $1 million more than the drug's U.S. sales for the same period, says IMS Health. It's $55 million more than consumer advertising for Lipitor, the world's best-selling drug, whose 2004 sales were $11 billion.

All told, U.S. ad spending for Cialis, Levitra and Viagra topped $406 million for the first 11 months, up from $136 million for Viagra and Levitra the same period a year ago, Nielsen says. Spending for Coca-Cola was just $22 million higher, Nielsen says.

With all that, "it is a bit disappointing that it (the market) hasn't taken off as some expected," Pfizer spokesman Daniel Watts says.

But Icos sees the situation differently. It points to Cialis' No. 2 market share in terms of prescriptions as evidence that big ad spending has worked.

It's also common for ad spending to outpace sales in a launch year, Icos' Vice President for Marketing Leonard Blum says.

He also says Nielsen's numbers are high because they don't account for discounts. Icos wouldn't release figures. But it's not shying from big buys. Cialis ads will run during Sunday's Super Bowl telecast, their second consecutive appearance. Thirty-second spots sell for an average $2.4 million, a record.

"The market is growing fast enough for Cialis to succeed," Blum says. "Our competitors are not seeing the demand that they had projected."

In April 2003, before Cialis and Levitra, 22% of patients got free samples but no prescriptions. That rose to between 29% and 40% of patients in December, ImpactRx says.

"There's a lot of free product out there, and that's a challenge," says Michael Fleming, a spokesman for GlaxoSmithKline, which co-markets Levitra with Schering-Plough in the USA. "We believe that will increasingly translate into sales."

But doctors point to perhaps more vexing reasons for disappointing sales.

"A lot of it is interest," says John Mulcahy, co-chairman of the sexual function health council of the American Foundation for Urologic Disease. "We've talked a lot about this. How do we light a fire under these guys?" He quotes studies showing that 30 million American men suffer from erectile dysfunction but only 10% to 15% are being treated.

Many older men may still be too embarrassed to ask about treatment, he adds, or don't think it's worth it, especially if their insurance won't cover the cost. Without insurance, the cost is about $9 to $10 a pill for the three market leaders.

For many others, the pills don't work or should not be taken with other drugs they're on, says Timothy Tsang, chief of urology at Kaiser Permanente in San Jose, Calif.

He says the drugs work for about one out of two patients. Mulcahy sees a success rate of two out of three.

Tsang is skeptical that big advertising spending will draw that many more men to the products. "People who want to seek care have already tried," he says. "The message is out in terms of getting men in to see their doctors."

Viagra holds lead

While the newcomers have cut into Viagra's sales, its market share for new prescriptions is still above 63%, says Verispan, a research firm that tracks sales at 55% of U.S. pharmacies.

While the three drugs are similar, Cialis is effective for up to 36 hours, vs. about four to six hours for Viagra and up to 12 for Levitra.

Robert Hazlett, analyst at SunTrust Robinson Humphrey and one of the most optimistic about the market, expects overall U.S. sales to rise 13% this year, helped by new prescriptions and price increases.

While overall growth "has been a little bit of a disappointment," he says. "It's growing in the right direction."